I am Forbes' Opinion Editor. I am a Senior Fellow at the Manhattan Institute for Policy Research, and the author of How Medicaid Fails the Poor (Encounter, 2013). In 2012, I served as a health care policy advisor to Mitt Romney. To contact me, click here. To receive a weekly e-mail digest of articles from The Apothecary, sign up here, or you can subscribe to The Apothecary’s RSS feed or my Twitter feed. In addition to my Forbes blog, I write on health care, fiscal matters, finance, and other policy issues for National Review. My work has also appeared in National Affairs, USA Today, The Atlantic, and other publications. I've appeared on television, including on MSNBC, CNBC, HBO, Fox News, and Fox Business. For an archive of my writing prior to February 2011, please visit avikroy.net. Professionally, I'm the founder of Roy Healthcare Research, an investment and policy research firm. In this role, I serve as a paid advisor to health care investors and industry stakeholders. Previously, I worked as an analyst and portfolio manager at J.P. Morgan, Bain Capital, and other firms.

President Obama’s second inaugural address has been widely hailed (or panned, depending on your point of view) as an unapologetic defense of big-government liberalism. But despite the fact that his speech argued the contrary, Obama’s policy legacy is that future generations of Americans will fight each other for access to scarcer and costlier health-care resources.

“The commitments we make to each other through Medicare and Medicaid and Social Security,” exclaimed the President, “these things do not sap our initiative. They strengthen us.” A truly efficient system of universal coverage, such as that of Switzerland or Singapore, might indeed strengthen us. But even if you believe that Medicare and Medicaid are the model of efficiency—which they are not—the runaway costs associated with those programs are requiring higher and higher taxes to fund them. Eventually, higher and higher taxes do sap initiative, because they reduce the economic value of initiative.

“We must make the hard choices to reduce the cost of health care and the size of our deficit,” Obama assures us. But when it comes to reducing the scale and growth of health spending—our country’s biggest problem—Obamacare represents, at best, tinkering around the edges. Its Medicare Independent Payment Advisory Board lacks the authority to make meaningful improvements to Medicare’s cost structure, such as improving the design of its co-pays and deductibles. Accountable care organizations, by accelerating the consolidation of hospitals and physician practices, will make health care more expensive.

President Obama has told House Speaker John Boehner (R., Ohio) that “we don’t have a spending problem” because we have a “health-care problem.” The President isn’t wrong about that—the spending problem is about spending on health care—but instead of working to reduce federal health-care spending, Obamacare massively expands it.

Obama’s final inauguration comment about our entitlement crisis was that he and his followers “reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future.” It’s Obama’s favorite rhetorical device: to describe a false choice between two irresponsible extremes, which he alone stands astride. But the rhetoric is in stark contrast to what Obama has actually done over the past four years.

The plan proposed by Mitt Romney and Paul Ryan to reform Medicare would have put that program on a path toward long-term solvency, without making any changes to the program for anyone over the age of 55. That plan reflected exactly what President Obama claims to support: continuing to care for the elderly, while ensuring that Medicare remains solvent for the future.

How did President Obama react to the Romney-Ryan approach? By shrieking that it would “end Medicare as we know it” and leave seniors “on their own.”

By contrast, it’s Obamacare that creates a long-term collision between the law’s exchange-based, costly, subsidized health insurance for younger Americans, and Medicare’s unlimited subsidy of health care for the elderly. We can’t afford both, and over time, the inexorable fiscal math will force us to take a side.

There is still time to reform Obamacare into something resembling a fiscally stable health-care system. It involves significantly reworking Obamacare’s exchanges, such that young people can afford the insurance plans they will now be forced to buy. It involves rolling back Medicare’s subsidies for wealthy retirees by migrating younger retirees onto the reformed exchanges, by raising Medicare’s retirement age. And it involves encouraging governors to resist the temptation to irreversibly expand Medicaid.

The President’s inaugural rhetoric makes clear that he’s not particularly interested in finding common ground. That’s his prerogative, and GOP complaints to the contrary are a bit whiny. What Republicans should be focusing on instead is building the case for their own reforms, so that they can prove what Obama claims to believe: that it is possible to improve the way we care for our parents and grandparents, while also saving the country for future generations.

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Hi, at-least appreciate the president for taking the first step towards reforming Healthcare. It was a contentious debate when Obamacare was passed and substantial reform towards cost controls were not accommodated due to special interests. The way we administer our Health care is every expensive. It is not about keeping the plan unchanged for people over 55 or rolling back subsidies for the wealthy using medicare, though the latter is a good first step. If you undergo a surgery or stay at a hospital for a couple of days you come out bankrupt. This is how the hospitals structured their business model. Of-course, there was always somebody paying for this, in some cases Uncle Sam. Reform is needed in the way we administer Health and there are special interests @ work here and i don’t think Obama or the congress is ready for a fight here. While Obama sticks to his guns, the congress wants the easy way out, abolish Obamacare. –MC

“Hi, at-least appreciate the president for taking the first step towards reforming Healthcare”

It was the run-up to so-called healthcare reform that taught attentive observers to pay no attention to Obama’s flowery words, but instead to watch what he and his administration actually do.

Obama said that his health care reform plan would insure the uninsured and at the same time reduce costs.

In selling his plan this way, Obama led the public to believe that everyone could be covered. Of course the CBO and others now estimate the uninsured may reduce by half. That’s a good result. But it’s not the result that Obama promised.

As to cost, Obama said his plan would reduce insurance costs by $2500 a year for the average family. Obama also said he would not sign legislation that added “one dime” to the nation’s deficit. These promises were fundamental in getting public support for PPACA. Obama didn’t deliver on these promises either.

You seem to think Obama failed to achieve “substantial reform towards cost controls” because of “special interests”. In other words, Obama failed to negotiate agreements with these special interests. Apparently you see reason to “appreciate” all that failure.

For my part however, I appreciate Obama’s real success. I say that Obama got just about everything he really wanted. Obamacare is not about meaningful reform of our medical delivery system. That was the sugar-coating around the real objectives – expanded executive powers and federal control over oceans of additional revenues. Kathleen Sebelius proves it every time HHS issues another regulation.

Costs are not high just because of the Obamacare. They have been going up for quite some time now. In 2002, my company used to pay $500/- appro as premium per month for covering my Family, today that is my out of pocket expense. You walk into a hospital for an X-ray, it costs around $250-$300. If you shop around, you can get it for $60-$80. That is one example of how the hospitals structured their revenue. Most of the uninsured, walk-in, end up using those services and there is always some program like Medicare or Medicaid or charity to cover this. If they are insured on the other hand, the insurer will shop for those cheaper services. These are some of the costs that are expected to come down with most people insured. Just like the Financial crisis we have now, we try to deal with it. When the crisis hits home on medical costs of Obamacare, the congress will deal with it. I hope they will not throw the people on the road again but deal with the costs this time around. –MC

Obama simply does not keep his promises. That is a serious problem for a president. The public simply cannot afford to listen to Obama’s flowery words and not pay attention to what he actually does – because he regularly fails to do what he says he will do. In the case of Obamacare, he promised universal coverage and lower costs. Neither is at all likely. The reality does not live up to the promise.

“some of the costs that are expected to come down with most people insured.”

Right there is a good example. For what conceivable reason will the cost of delivering medical care “come down” when most people are insured? Hope perhaps?

You are basically assuming that Obamacareless will still be around in a decade or 2… lots of luck with that, and not because of some great republican conspiracy either. Obamacare is going to explode on its’ own merit’s or in this case demerits.

NOwhere in Obamacare is there ANY attempt at cost recognition! On the contrary, the system seems to have been built on letting costs rise with NO attempt whatsoever to how people are going to afford a yearly increase of 17%+. I guess what do you expect from a bunch of Harvard LAWYERS ONLY seeking to maintain the current deplorable lack of tort reform.

I won’t even go into the reality that the underlying issue with Obamacare is that: EVERYONE thinks it’s their inalienable right to live forever and NOT have to pay for that privilege.

Rich conservatives must put their money where their mouths are by refusing all social welfare programs, that of Medicare and Social Security that were initially intended to aid those unable to afford that care on their own. As the rich do not need those aids, all of the monies in those programs should go to those for whom it was originally intended, and the rich should not be forced to contribute to those programs if they so choose.

To do this would be putting gov’t back where it belongs, helping those in need, and leaving alone those well able to care for themselves.

“Rich conservatives must put their money where their mouths are by refusing all social welfare programs, that of Medicare and Social Security that were initially intended to aid those unable to afford that care on their own. ”

Costs are exploding due to chronic disease/s overtaking our population. Yes, older Americans are more susceptible, however modern life is causing an explosion of conditions like diabetes and cardiovascular diseases among the younger population.

It’s not hard to see the future. ACA is simply a cruel “shell game” placing the government in a control position between, employers and employees & doctors and their patients. If 30 million Americans suffered from a lack of insurance, ACA will simply redistribute their misery to ineffective governmental controlled/rationed care to the 200+ million currently covered under public & private plans.

Solutions exist to identify, and in-turn help, our emerging future high-risk members to mitigate/prevent high-cost disease. Patients and providers can be held accountable/positively rewarded for health outcomes. This will never come from any governmental programs or mandates. As Americans we should get to know the Canadian and UK systems.